■ Lesar joined Houston-based Halliburton, the world's
largest diversified energy services, engineering, and construction
company, in 1993. In August 2000 he was named chairman of the board of
directors, president, and chief executive officer. Lesar succeeded Richard
B. Cheney, who left when he accepted the Republican presidential candidate
George W. Bush's offer to become his vice presidential running
mate. Cheney stated in a PR Newswire article, "Having worked
closely with Dave Lesar and the Halliburton management team over the past
five years, I have great confidence for the future success of
Halliburton" (July 25, 2000).

HALLIBURTON

Halliburton operates in over one hundred countries, with more than 83,000
employees working worldwide in diverse areas, such as deepwater drilling,
remotely operated vehicle operations, and railroad construction. It also
provides products, services, maintenance, and engineering to the energy,
construction, and government sectors. It receives about 70 percent of its
revenues outside the United States, with 70 to 75 percent of its business
being related to energy.

The company, with about $16.2 billion in total sales in 2003, conducts
business through its two main groups: Halli-burton Energy Services Group
and Halliburton Kellogg Brown and Root (KBR Engineering and Construction).
In March 2002 Lesar separated these two groups into two wholly owned
operating subsidiaries. The Energy Services Group (with about 55 percent
of Halliburton's revenues and more than 80 percent of its operating
income) provides a wide diversity of products and services to gas and oil
customers worldwide, such as pressure pumping services, drill-bit and
other down-hole and completion tool manufacturing, undersea engineering,
oil and gas equipment, production enhancement, and logging and testing.
Halliburton KBR works on both energy-related and civil infrastructure
facilities, such refining and processing plants, liquefied natural gas
plants, pipelines, and production facilities, both offshore and onshore.
Its nonenergy business provides the engineering and construction needs of
government and civil infrastructure customers. KBR supplies operations and
maintenance for a wide variety of facilities, such as prisons, highways,
and stadiums, and offers planning and management support for the U.S.
military.

ADVANCING WITHIN HALLIBURTON

After 16 years of employment at Arthur Andersen in Dallas, Texas, last
serving as a commercial group director and partner in charge of the oil
and gas, manufacturing, telecommunications, and retail sectors, Lesar
joined Halliburton. For two years (from 1993 to 1995) he was executive
vice president of finance and administration of Halliburton Energy, and
the next year he served as executive vice president and chief financial
officer of Halliburton Energy Services, a Halliburton business unit. From
June 1996 through June 1997 he was president and chief executive officer
of Brown & Root, the Halliburton business unit that provides
engineering and construction services in the petroleum, forest products,
civil, environmental, manufacturing, maintenance, and government markets.
From June 1997 to August 2000 Lesar was president and chief operating
officer of Halliburton. In August 2000
Lesar assumed the position of chairman, president, and CEO of
Halliburton.

IMPACT ON COMPANY STRATEGY

Halliburton's strategy essentially did not change when Lesar took
over from Cheney. For several years Lesar had already been actively
running the company, with Cheney responsible for interacting with
customers. In fact, during the years before becoming chief executive
officer, Lesar was critical in the company's transition from
market-share mining (which involved concentrating solely in mining) to a
more diversified position involving the entire spectrum of oil and gas
products and services. Lesar helped Halliburton executives recognize that
the industry was preparing to outsource more technologies to service
companies—services that Lesar wanted Halli-burton to be able to
provide throughout the industry.

As a result of the outsourcing trend, Lesar led Halliburton in a series of
acquisitions, which allowed the company to obtain the skills and tools it
needed to offer services in such areas as directional logging, liquefied
gas products, drilling, and reservoir integration. He found that
Halliburton was able to provide these services to a wide range of
companies, from large integrated oil companies to small independent
companies. In addition, Lesar played an important part in developing
Halliburton's investment in research and development, which reduced
costs, increased safety, and decreased environmental impacts. From 1997 to
2001 Lesar oversaw Halliburton's billion-dollar investment in
developing technologies. These technologies created products that solved
problems, enhanced assets, and delivered long-term value for customers and
shareholders. By 2001, 20 percent of Halliburton's total revenues
were in new technology accounts.

REVERSING LOSING PROJECTS

In the first few years of the 2000s Halliburton lost money on several
large international engineering, procurement, installation, and
construction (EPIC) projects. The EPIC projects were formerly run as
lump-sum payments—single payments made at the beginning of a
contract, and in which Halliburton paid all unexpected costs during the
contract period; however, since actual costs were often higher than
estimates, losses occurred. Lesar saw, for instance, that in 2002
Halliburton lost $119 million on a joint venture to develop 55 deepwater
oil wells off Brazil's coast, and another $33 million on an
offshore Philippine oil platform project. As a result, KBR's
operating profit margins were only 2.1 percent in 2002, below its
predicted 3.0 percent. Lesar declared that Halliburton would no longer bid
for lump-sum payments on international EPIC projects.

LOGCAP

By 2004 the U.S. military relied greatly on private military companies
(PMCs) to support its operations in many countries, such as Iraq. In fact,
civilian contractors handled as much as 20 to 30 percent of critical
military support services in Iraq. Lesar made sure that KBR was the
best-equipped service company to assume those jobs. In the early 2000s the
company housed, fed, and maintained (with such functions as mail delivery,
laundry facilities and operations, and heavy equipment use) American
fighting troops in some of the world's most remote and dangerous
locations. Based partly on KBR's past performance in supporting
U.S. forces, Lesar secured, in December 2001, a 10-year project from the
U.S. Pentagon known as the Logistics Civil Augmentation Program
(LOGCAP)—a U.S. Army plan that hires civilian contractors to
support U.S. forces in Department of Defense missions. The cost-plus
contract, a pricing system that calculates the price of a product by
adding a specified percentage as profit to the contract—thus
guaranteeing the company a small profit—was open-ended and thus
gave KBR the budgetary freedom to send its employees anywhere in the world
to run military operations.

Lesar secured KBR's first LOGCAP contract in June 2002, during the
"war on terrorism." It was awarded a $22 million contract to
operate support services at Camp Stronghold Freedom, which is located at
the Khanabad Air Base in central Uzbekistan. KBR supplied products and
services to Khanabad—one of the primary U.S. bases in the
Afghanistan war that housed approximately one thousand U.S. soldiers.
Later, in November 2002, Lesar secured a one-year contract, estimated at
$42.5 million, to make available laundry services, showers, mess halls,
and heating equipment services for troops at bases in Bagram and
Khandahar, in Afghanistan. KBR also received contracts to help run
Incirlik Air Base and other U.S. military facilities in Turkey.

E-VENTURES

Lesar pursued Internet-type electronic ventures (eventures) in order to
integrate other leading companies into one group. One of Lesar's
initiatives was his 2000 agreement to partially acquire Petroleum Place, a
leading Internet company that focuses on improving how procedures are
conducted with respect to buying and selling within the global oil and gas
market. In partnership with Halliburton's wholly owned subsidiary
Landmark Graphics Corporation, Petroleum Place offers online access to
Landmark software for use with buying and selling of company products and
services. In addition, in 2004 the alliance was planning to develop
software for evauating prospective oil and gas fields and other such
properties.

Lesar stated that such a project would enable Halliburton to better assist
oil companies with the management of their oil and gas reservoirs. Though
acquisitions and divestitures are
generally inefficient in discovering new properties and evaluating
existing properties, Lesar believed that the Petroleum Place alliance,
with its use of Internet-based data analysis, would reduce the time needed
for analysis reviews and lower costs of materials and labor.

CRITICISM

Halliburton and its subsidiaries were widely condemned in the early 2000s
for their contracts in various countries where environmental problems and
human rights violations are widespread (including Algeria, Bolivia,
Bosnia, Brazil, Haiti, Iran, Iraq, Libya, Somalia, and Indonesia). The
company's associations with past and present U.S. administrations,
including its relationship with Vice President Dick Cheney, who served as
Halliburton's chief executive officer between 1995 and 2000, were
also problematic.

Lesar and Halliburton were criticized about accounting procedures as well.
In the late 1990s Halliburton transferred from cost-plus contracts to more
fixed-price contracts. The new contracts required the company to finish
jobs for a fixed fee and then to attempt to negotiate payments of cost
overruns and changes in orders. Although resolving such disputes can take
months or even years, Halliburton financial officials decided it was
"reasonable" to identify, for tax purposes, at least part of
the revenue from the claims during the time they were in dispute. The U.S.
Securities and Exchange Commission investigated whether this accounting
practice was intended to defraud.

Lesar also contended with asbestos litigation, which was initiated when
the company acquired Dressor Industries in 1998 for $7.7 billion. A
Dressor subsidiary had once used a carcinogen in its pipe coatings and
bricks. Lesar initiated a bold plan to settle asbestos-related lawsuits by
instituting a "contained" bankruptcy of KBR, a plan that
would keep most of Halliburton out of bankruptcy.

FUTURE PROSPECTS

Lesar hoped that Halliburton would continue to be a leading—if not
the leading—player in the multibillion-dollar rebuilding of postwar
Iraq, particularly the rebuilding of the country's oil wells. But
along with the increase of government contracts awarded to Halliburton
came accusations that the company was receiving favoritism from
politically prominent employees and former employees.

Lesar rejected such talk by pointing to the company's long history
as a government contractor. He continued to insist that he was very proud
of the Halliburton organization and especially of its support of the U.S.
military and the savings it had provided to the military's overseas
activities. In any case, the bottom line for Halliburton was that its
future, especially with Lesar at the helm, looked promising and
profitable.

See also
entries on Arthur Andersen & Company, Société
Coopérative, and Halliburton Company in
International Directory of Company Histories
.